Amber Rudd is to scrap a controversial plan to extend the two-child benefits cap, as part of an attempt to "reset" public perception of Universal Credit.

In an exclusive television interview with Sky News, the work and pensions secretary described her role as the most important job in government.

She warned a no-deal Brexit would be the worst outcome for the country, and indicated the benefit freeze would not be extended once the current timetable concludes next year.

I remain very committed to Universal Credit, she said. But I am looking at ways to demonstrate to people that it is fair and compassionate, and with that in mind I am making some changes.

Overall my aim in doing this reset is effectively to build confidence in Universal Credit.

The much-criticised extension of the two-child benefit cap, which means child benefits are not paid for third or subsequent children, was due to take effect next month.

It would have been applied for the first time retrospectively to children born before the overall policy was introduced in April 2017.

Now, the Department for Work and Pensions estimate 15,000 families could benefit from the policy being dropped.

It’s with the fairness of Universal Credit in mind that I decided to scrap it, Ms Rudd told Sky News.

It’s right that we have a two-child policy when people are thinking about having a third child. People on low income and benefits need to consider what sort of funds they’ve got.

But I don’t think it’s right that you have this existing two-child policy that was introduced recently acting retrospectively for people who might have three, four, or five children, she added.

In response, Labour’s shadow work and pensions secretary Margaret Greenwood said: This partial U-turn does not go far enough.

Labour has long called for the government to abandon the two-child limit in its entirety.

The legality of the two-child benefit cap is currently being challenged in the courts by Child Poverty Action Group.

Head of policy and research for the group, Josephine Tucker, said: We hope that this announcement will be the first step towards abolishing the policy as a whole.

Because as time goes on more and more families will still be caught up in it, and hundreds of thousands of children will still lose out on support simply because of the numbers of brothers and sisters they have.

Not only is that not right in principle, but it’s going to cause a serious increase in child poverty.

Further announcements expected during Ms Rudd’s first major speech as work and pensions secretary on Friday will include:

:: Steps to make weekly and fortnightly payments more accessible

:: A new online system for private landlords to get rents paid directly to them

:: Confirmation that the managed migration of claimants from legacy benefits to Universal Credit will be initially limited to a test group of 10,000 people

When asked about measures she hopes to bring forward in the future, Ms Rudd gave the clearest indication yet that the four-year benefit freeze, which has been in place since 2015, will not be renewed when it comes to an end next year.

It was the right policy at the time, it’s got one more year to run, I look forward to it coming off, she said, adding: I do not expect that to be renewed at all.

Asked by Sky News whether she still had leadership ambitions, she said: I genuinely think that Universal Credit, running Universal Credit, making it work for people and giving people confidence in it is probably the most important job in government at the moment and I’m completely committed to making it work.

But, despite that focus on Universal Credit, many in Westminster view the significance of her return to cabinet more in terms of the influence she may have on the course of Brexit.

The government has suffered two parliamentary defeats this week at the hands of pro-European Tory rebels backing amendments seeking to prevent the government pursuing a no-deal Brexit.

Asked by Sky News whether she would have also been among the rebel ranks had she still a backbencher, given her well-known pro-European views, she responded: Oh, that’s very difficult to tell. Because I’m in the cabinet, I’m committed to the government policy.

On Brexit, getting it right is so important for everything I’m doing in my department, and everything the government is doing to try and improve the economy and work with families.

So Universal Credit will continue to expand and be a success as long as the economy is strong.

She concluded: The worst outcome would be a no-deal Brexit where the economy would be adversely affected.